Iron ore producers hope that infrastructure development will boost demand for steelmaking materials. [Photo / Bloomberg]
SHANGHAI - China Vanadium Titano-Magnetite Mining Co, the largest non-State-owned iron ore producer in Sichuan province, plans to double output capacity within three to five years to meet domestic demand.The company is aiming to produce up to 6 million tons of iron ore concentrate annually, Jiang Zhongping, chairman of the Chengdu-based company, said in an interview.
Jiang is betting that China's moves to improve infrastructure and employment in western provinces, such as Sichuan, will boost demand for steelmaking materials. China Vanadium aims to boost iron ore resources to exceed 600 million tons during the period from the current 400 million tons, he said.
"China's less-developed western regions are rich in natural resources," Jiang said on Tuesday. The company stands to benefit from government efforts to boost the local economy, he said.
China Vanadium fell 3.1 percent to close at HK$3.13 ($0.40) on Tuesday in Hong Kong, taking the decline to 15 percent this year. The benchmark Hang Seng Index was down 1.5 percent in the same period.
China Vanadium's profit surged 63 percent to 533.4 million yuan ($81 million) last year on higher production and prices. Profit may rise 29 percent to 688.3 million yuan this year and another 12 percent to 772 million yuan in 2012, according to the mean estimate of three analysts compiled by Bloomberg.
Sichuan province will add 10 million tons of steel production capacity by 2012, translating into additional iron ore demand of 18 million tons, Jiang said in August.
There will be a shortfall of 10 million tons of iron ore in the region during the period, he said on Tuesday.
The price of 62-percent iron ore arriving at China's Tianjin port traded at $166.30 a ton on March 14, after hitting $191.90 on Feb 16, the highest level since November 2008, according to data from The Steel Index compiled by Bloomberg.
China Vanadium will spend 600 million yuan this year to complete the acquisition of Aba Mining Co Ltd and expand its production capacity to 250,000 tons a year from 150,000 tons, Roy Kong, chief financial officer, said at the same interview. It also has more than 1 billion yuan in cash for acquisitions, Kong said.
"Our focus is Sichuan's Panxi region," Jiang said. The company so far doesn't have plans to acquire coking coal assets or to expand overseas, he said.
China Vanadium also aims to boost titanium concentrate capacity to 400,000 tons within three to five years from 180,000 tons last year, Jiang said. It plans to start a 100,000-ton production line this year, Kong said. Vanadium is used to harden and toughen steel alloy.
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